New Carnage for New Century
Original article is here.
Wow, there's just not much left to say for New Century Financial (NYSE: NEW). This morning, it snuck out a little 8-K that confirmed what many of us had suspected since late last week. Here's the juiciest tidbit hidden (not unlike last week) toward the bottom of the release.
"As of March 9, 2007, all of the Company's lenders under its short-term repurchase agreements and aggregation credit facilities had discontinued their financing with the Company or had notified the Company of their intent to do so."
In other words, it looks like ain't no one givin' 'em any money no more. Not Morgan Stanley (NYSE: MS). Not Bank of America (NYSE: BAC). Not Goldman Sachs (NYSE: GS). Not Credit Suisse (NYSE: CS).
That's a major problem because, last I checked, swapping money from one group to another was how New Century made ends meet. Now that Wall Street has lost its appetite for funding the U.S. sub-prime fantasyland, it has not only clamped down on New Century, but it's demanding a few do-overs. Unfortunately, New Century can't afford to buy back all those notes gone bad, according to this final tidbit, "The Company and its subsidiaries do not have sufficient liquidity to satisfy their outstanding repurchase obligations under the Company's existing financing arrangements." (That was hidden even lower in the press release. Note to self: Read all future New Century press releases backwards.)
Will there be anything left for the carrion birds that do get a seat at this carcass?
Bank of America is an Income Investor pick.
At the time of publication, Seth Jayson had no positions in any company mentioned here. View his stock holdings and Fool profile here. Fool rules are here.